Why is a monopolist a price maker?
What will be an ideal response?
A monopolist faces a down sloping demand curve and has total control over the amount of a product that is supplied. Thus the monopolist essentially sets the price by what level of production it chooses. In this way, the monopolist is a price maker.
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Which of the following is a condition for efficiency in the output market?
A) MRT = MPL/MPK B) The marginal rate of substitution is the same for all customers. C) The marginal rate of technical substitution must be the same for all producers. D) The marginal rate of transformation must equal the marginal rate of substitution.
Suppose that at the prevailing euro-dollar exchange rate there is an excess demand for dollars. To stabilize exchange rates, the United States might
A. Raise interest rates. B. Raise taxes. C. Reduce government spending. D. Decrease trade restrictions on euro-priced goods.